CarTrade filed its draft red herring prospectus or DRHP on Sunday and we take a look at their numbers made public, analysing its earnings for the first three-quarters of FY21.
The Gurugram-based company collected Rs 189.6 crore in total earnings during April-December 2020. Out of this, Rs 167.6 crore was revenue from operations and the rest Rs 22.03 crore in financial income from investment assets.
The company has several revenue streams including collecting commission and fees from the auction and remarketing services of used vehicles, providing online advertising solutions and lead generation for OEMs, dealers, banks and other financial institutions.
Besides this, CartTade also provides CRM software to car companies and inspection and valuation services for retail customers, banks, et al. It earned 35.6% of its operating revenue from “website services and related fees” and the rest 64.4% from commissions.
In the previous fiscal or FY20, its revenue from operations had increased by 22.61% to Rs 298.3 crore from Rs 243.3 crore in FY19. This growth was driven by commission and related income that jumped 13.03% to Rs 181.7 crore in FY20.
On the expense front, employee benefits expense was the biggest cost centres for the company for the nine-month period ending December 31, 2020, accounting for 57% of the total expenses.
These costs alone stood around Rs 92 crore and were made up of salaries, wages and bonuses of Rs 80.56 crore paid to its total employee strength of 1,999.
During the first three-quarters of FY21, CarTrade spent only Rs 22.6 lakhs on the purchase of stock of used cars as it moved to a commission-based business model instead of trading.
Finance and depreciation costs totalled Rs 18 crore while other operating expenses amounted to Rs 52.3 crore for the nine months ending December. The latter primarily included security charges of Rs 11.24 crore at Shriram Automalls and Rs 7.8 crore on marketing campaigns.
The company has spent Rs 162.1 crore in total during April-December 2020, equivalent to 85.5% of total income earned during the same period. In the previous fiscal, total expenses had grown by 22% YoY to Rs 277.4 crore.
The Finance Bill of 2021 said that the goodwill of a business or profession can no longer be considered a depreciable asset and no depreciation will be allowed in any situation for assessment years beginning on April 1, 2020. Therefore, the company has booked deferred tax assets of Rs 65.74 crore related to outstanding losses caused by depreciation.
As a result, the profit for the period April-December 2020 has been inflated to Rs 85.05 crore. During the previous fiscal, Cartrade’s profit had grown by 20.4% from Rs 26 crore in FY19 to Rs 31.3 crore in FY20.
The financial performance for CarTrade is likely to cross Rs 100 crore and may touch Rs 125 crore. This is a good sign for the IPO-bound company which has set a target to raise Rs 2,000 crore from the public market.
After EaseMyTrip and Zomato, it would be the third consumer-facing internet company to list on an Indian stock exchange this year. Zomato had filed its DRHP last month.
fzomaWhile EaseMyTrip’s post IPO performance has been shaky, it would be interesting to see how the market would respond to the public listing of the two unicorns.